We have analysed the interactions of three proteoglycans of the decorin family, decorin, biglycan and fibromodulin, with transforming growth factor beta (TGF-beta). The proteoglycan core proteins, expressed from human cDNAs as fusion proteins with Escherichia coli maltose-binding protein, each bound TGF-beta 1. They showed only negligible binding to several other growth factors. Intact decorin, biglycan and fibromodulin isolated from bovine tissues competed with the fusion proteins for the TGF-beta binding. Affinity measurements suggest a two-site binding model with Kd values ranging from 1 to 20 nM for a high-affinity binding site and 50 to 200 nM for the lower-affinity binding site. The stoichiometry indicated that the high-affinity binding site was present in one of ten proteoglycan core molecules and that each molecule contained a low-affinity binding site. Tissue-derived biglycan and decorin were less effective competitors for TGF-beta binding than fibromodulin or the non-glycosylated fusion proteins; removal of the chondroitin/dermatan sulphate chains of decorin and biglycan (fibromodulin is a keratan sulphate proteoglycan) increased the activities of decorin and biglycan, suggesting that the glycosaminoglycan chains may hinder the interaction of the core proteins with TGF-beta. The fusion proteins competed for the binding of radiolabelled TGF-beta to Mv 1 Lu cells and endothelial cells. Affinity labelling showed that the binding of TGF-beta to betaglycan and the type-I receptors in Mv 1 Lu cells and to endoglin in endothelial cells was reduced, but the binding to the type-II receptors was unaffected. TGF-beta 2 and 3 also bound to all three fusion proteins. Latent recombinant TGF-beta 1 precursor bound slightly to fibromodulin and not at all to decorin and biglycan. The results show that the three decorin-type proteoglycans each bind TGF-beta isoforms and that slight differences exist in their binding properties. They may regulate TGF-beta activities by sequestering TGF-beta into extracellular matrix.